September 11, 2025 Smart Fixes to Handle the Manufacturing Labor Shortage

The steps manufacturers are taking to minimize the impact of labor shortages on production, product quality and profitability.

By Vick Vaishnavi, CEO of ETQ, part of Hexagon.

Manufacturers around the globe continue to grapple with chronic labor shortages, an issue compounded by retiring workers, geopolitical factors and changing workforce preferences. Despite recent data on rising unemployment rates across some sectors, current data still indicates a significant labor shortage in U.S. manufacturing. According to the Bureau of Labor Statistics, there are nearly half a million open manufacturing jobs. The monthly gap between manufacturing job openings and hirings has hovered at about 100,000 positions, with more than 60% of employers in a recent survey by the National Association of Manufacturers indicating that attracting and retaining talent is a top concern.

A perfect storm has been brewing for years. While an aging workforce is often cited as the primary cause of the current skilled labor shortage, other factors are at play including shifting immigration policies, a worsening skills gap, a lack of interest in manufacturing jobs among younger generations and other workforce shifts such as the rise in work-from-home options offered by other sectors. Another key factor at play is reshoring, which has boosted the demand for domestic (U.S) manufacturing workers, and has been further exacerbated by the recent changes to U.S. tariff policy.

During the early days of the pandemic, approximately 1.4 million manufacturing jobs were lost and, as the industry recovered, the demand for skilled workers has increased, leading to a labor crisis. In fact, the Manufacturing Institute projects a need to fill four million positions by 2030, with over two million positions potentially remaining open. This shortfall would significantly impact production efficiency, output, quality and profitability for years, as well as have broader economic and supply chain implications.

While the economic factors are considerable, the broader implications of a worsening labor shortage are widespread and severe. According to the ETQ Pulse of Quality in Manufacturing 2025 survey, 70% of U.S. manufacturers report being affected by labor shortages, with 88% indicating that it has compromised product quality. In the same survey, 75% reported experiencing a product recall in the past five years, with nearly half of those costing between $10 million to $49.99 million per incident. Other impacts of the labor crisis that also can exacerbate the issue include:

• Increased number of safety incidents
• Reduced production capacity
• Delivery delays and product backlogs
• Increased overtime and worker burnout
• Potential regulatory scrutiny due to product recalls and safety incidents
• Challenges in maintaining consistency and standards
• Loss of institutional knowledge
• Negative impact on reputation and competitiveness in global markets

Manufacturers are getting serious about addressing the labor shortage and turning to technology, workflow and ingenuity to tackle the rising epidemic head on. Following are five strategies manufacturers are employing to address these challenges.

1. Putting AI into overdrive. Manufacturers are increasingly turning to digital solutions to compensate for workforce shortages. According to the ETQ survey, 33% of respondents already use AI in manufacturing, with 49% reportedly planning to implement it within two years. The most common AI applications cited include defect detection, process automation and predictive analytics. The expansion of AI’s capabilities will yield deeper data-driven insights, and the ability to understand and effectively use these new technologies across manufacturing facilities will be critical. Embracing AI doesn’t just help mitigate the effects of the worker shortage, it could also be a solution to help attract younger workers.
   
   
2. Investing in robotics and automation. One of the most immediate benefits of robotics is the ability to automate repetitive and physically demanding tasks, such as assembly, material handling and picking and packing. Likewise, cobots, or collaborative robots, are working safely alongside humans, assisting by handling parts, performing precision operations, or adding muscle to high-exertion projects.
   
   
3. Closing the employee skills gap. As skilled workers reach retirement age, the loss of institutional and process knowledge can have serious consequences on quality and productivity. Reskilling and upskilling are strategies that can help manufacturers address the operational and labor hurdles they face, and serve as an efficient, cost-effective way for organizations to acquire the talent they need from their existing talent pool.
    
4. Boosting training and knowledge transfer. Increased vocational training and apprenticeship programs can help ensure rising workers have the skills and experience they need. Access to these programs in recent years has declined, further contributing to the skills gap. Apprenticeships to help young people obtain vocational skills may be especially important for manufacturing jobs in areas such as mechanical systems, logic controllers, hydraulic power and robotics. Partnerships with regional workforce development programs and collaboration with community colleges and technical and trade high schools can help further expand the labor pool.
   
   
5. Increasing the perks. Today’s younger workforce has a wide variety of work options, many of which not only offer high wages and other incentives, but upward mobility and safety as well. Luring a new generation means offering attractive pay and work/life balance, but it also means providing the digital tools to keep the workplace safe and provide workers with the connectivity and data they need to understand the bigger picture instead of only the siloed job they handle.

Unfortunately, labor shortfalls in manufacturing are both a symptom and a driver of broader systemic challenges: an aging workforce, shifting workforce preferences, geopolitical and economic challenges. This can have tangible consequences on productivity, product quality and profitability. Fortunately, manufacturers are responding with creative solutions. They are investing in AI and automation, prioritizing quality management, partnering with workforce development programs, and reskilling as needed. Success will be determined by those who take a strategic, intentional approach to embracing technology, education and industry collaboration.

About the Author:
Vick Vaishnavi is CEO of ETQ, part of Hexagon, and is responsible for leading the overall business strategy and operations of ETQ. As a seasoned business and technology leader, he has extensive experience guiding software and other technology firms to industry leadership and business growth.

Read more from the author:

The Future of Generative AI for Manufacturers | October 2023

Subscribe to Industry Today